Biosensors International Group, Ltd. (Biosensors) has reported total revenues of $20.6 million for the third quarter of fiscal 2009, up 135%, compared with the total revenues of $8.7 million in the year-ago quarter. It has reported a net loss of $0.3 million, or 0.02 cents per share, for the third quarter of fiscal 2009, compared with the net loss of $7.8 million, or 0.75 cents per share, in the year-ago quarter.
Total product sales in the third quarter were $19.3 million, a 13% increase over the previous quarter (“2Q FY09”), and a 123% increase over the same period a year ago (“3Q FY08”), driven largely by continued growth in the sales of the BioMatrix drug eluting stent. Drug-eluting stent revenues were $11.1 million in the third quarter, 36% higher than 2Q FY09 and more than eight times higher than drug-eluting stent sales in 3Q FY08. Sales of other interventional cardiology products were $5.7 million, a 28% increase over 3Q FY08 sales of $4.4 million due to increased sales of bare-metal stents in Japan and Europe. Critical care product sales for the third quarter decreased by 18%, to $2.5 million, on lower demand in the US and Asia.
For the FY09 nine month period, total revenue was $96.6 million, a $64.2 million (198%) increase over the same period in the prior fiscal year (“FY08 nine-month period”). Of this increase, $40.0 million, or 62%, was a one-time, non-recurring payment by a licensee to reduce future revenue sharing percentages. Product revenues for the FY09 nine-month period rose by more than 98% compared to product revenues for the FY08 nine-month period. Similar to revenues for 3Q FY09, this growth was the result of increased interventional cardiology product sales, primarily drug-eluting stents, offset by a slight decrease in critical care product revenues.
Commenting on the company’s performance, Biosensors’ chief executive officer and president Mike Kleine said, “When I joined Biosensors just over one year ago, our goal was to achieve profitability late in fiscal 2009, based largely upon increasing our ownership share of JW Medical Systems (“JWMS”) from 50% to 100%. While we were not able to complete the JWMS transaction, strong organic sales growth and a sharper focus on our cost structure did allow us to achieve profitability before exceptional items and taxation
and to greatly enhance our operating cash flows during 3Q FY09. We are encouraged by the speed of our progress and we remain optimistic about our future.”
The company also reported significant gross margin improvement for its interventional cardiology products for both 3Q FY09 and the FY09 nine-month period. Product gross margins were 64% for 3Q FY09, versus 46% for 3Q FY08, and 58% for the FY09 nine-month period, versus 40% in the FY08 ninemonth period. The improvement was due primarily to a shift in product mix towards higher margin drug-eluting stents. The closure of the company’s Netherlands-based manufacturing facility, and the
discontinuation of its lower margin products, also contributed positively to the gross margin improvement for 3Q FY09.
“Going forward, we will focus not only on continued sales growth and operational improvement, but also on the ongoing need for relevant clinical data and an innovative product pipeline. We are also very aware of the need to address our future financing requirements, particularly our November 2009 obligation to retire $45.0 million in convertible notes plus accrued unpaid interest. While we may have adequate cash resources to retire these notes and interest with no additional financing, we are evaluating a proposal from the current debt holders and exploring several financing alternatives to retire these notes and provide adequate capital for our future operations” concluded Mr. Kleine. In 3Q FY09, research and development (“R&D”) expenses, which include costs for new product development and testing, clinical trials, patent registration and regulatory approval, were $4.4 million compared to $5.5 million in 3Q FY08. For the FY09 nine-month period, R&D expenses were
$17.1 million compared to $18.6 million for the FY08 nine-month period. The decreases in R&D expenses for the quarter and nine months were mainly due to decreased clinical trial expenses in Europe and lower payroll related expenses.
Sales and marketing expenses were $6.3 million in 3Q FY09 compared to $3.0 million in 3Q FY08, and $19.4 million for the FY09 nine-month period compared to $11.4 million for the same period in the prior fiscal year. The increase was a result of expenses incurred for the commercial launch of BioMatrix, including participation in trade shows and brand building activities; increased expenses related to product registry trials in Asia and Europe; and higher headcount costs as we expand our sales force and marketing activities in Europe and Asia.
General and administrative expenses were $4.5 million in 3Q FY09, compared to $4.4 million in 3Q FY08, and $15.4 million for the FY09 nine-month period, compared to $13.1 million for the nine months in the prior fiscal year. The increase was mainly attributable to additional payroll expenses related to key management personnel, increased non-cash share-based option expenses relating to new options granted, and increased costs incurred at the company’s new Singapore facilities. Included in the 3Q FY09 results is the equity method of accounting for the company’s 50% ownership interest in JW Medical Systems Ltd (“JWMS”), which resulted in net income of $1.9 million. For the quarter under review, JWMS sold approximately $11.0 million of its drug-eluting stents.
In 3Q FY09, the Group reported a net loss of $0.3 million (0.02 US cent loss per basic and diluted share) compared to a net loss of $7.8 million (0.75 US cent loss per basic and diluted share) in 3Q FY08. For the FY09 nine-month period, the company reported a net loss of $1.5 million (0.14 US cent loss per basic and diluted share) compared to a net loss of $10.9 million (1.13 US cent loss per basic and diluted share) for the FY08 nine-month period. The decrease in net loss for the quarter was mainly due to higher product revenue and improved gross margins, combined with an exchange gain of $1.8 million recorded in 3Q FY09. For the FY09 nine-month period, the decrease in loss per share was the result of the same factors that affected 3Q FY09, combined with the positive effect of the $40.0 million of license-related revenue recognized in the first quarter of the fiscal year.
Based upon its performance through December 2008, company management expects product revenues for the fiscal year ending 31 March 2010 (“FY10”) to range between $90 and $100 million, compared to FY09 product revenue guidance of $65 to $75 million. The projected sales growth of 30% over FY09 guidance will consist of continued strong drug-eluting stent sales increases, slower growth of other interventional cardiology product revenues and relatively flat sales of critical care products. The FY10 product revenue range does not include any royalty or licensing revenues. Management also believes its goal of overall profitability will be achieved in FY10, with operating results improving significantly during the second half of the fiscal year. Current estimates do not include any effects for foreign currency exchange gains or losses or any exceptional non-operating items.